The R&D Tax Credit is back! Find out how the Big Beautiful Bill Act can fund your R&D. Learn More
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Virginia provides two Research and Development Tax Credit options for companies performing qualified research in the state. Both can be claimed alongside the federal R&D credit, allowing businesses to significantly reduce their combined tax liability.
Virginia’s credits are:
Qualified expenses generally follow the federal IRC §41 rules but must be tied to work performed in Virginia. Typical examples include wages for Virginia-based R&D staff, supplies used in research, and 65% of contractor costs incurred in the state.
To claim the credit, companies file Form RDC (Research and Development Expenses Tax Credit) or Form R&D ETC, along with their Virginia corporate or individual income tax return. The refundable version is especially valuable for startups and growth-stage companies. Unused nonrefundable credits may be carried forward for up to 10 years.
📄 Virginia Department of Taxation – R&D Credit Overview
📄 Form RDC + Instructions (PDF)
It’s important to note that Virginia caps the total amount of credits allocated each year. If claims exceed the cap, credits are prorated. Choosing between the traditional and refundable versions requires careful planning to maximize benefit. Our team helps analyze both options, prepare documentation, and ensure filings are audit-ready.
Starting in tax year 2025, businesses can now immediately deduct domestic R&D expenses in the year they occur instead of spreading deductions over five years. The bill also offers refund opportunities for small businesses and faster deduction schedules for larger companies.
If your business has $31 million or less in annual gross receipts, you may be able to:
File amended returns for 2022–2024 to get cash refunds for previously capitalized R&D costs
Deduct remaining unamortized R&D expenses faster starting in 2025
Apply your R&D credit against payroll taxes—up to $500,000 per year for qualifying startups
Yes. Eligible small businesses can retroactively deduct R&D costs from 2022–2024 and claim refunds. Even larger companies can accelerate the deduction of past R&D costs over one or two years starting in 2025.
No. The 15-year amortization rule for foreign R&D remains in place. The new immediate expensing option only applies to U.S.-based research and development.
Savings vary, but many businesses may recover hundreds of thousands of dollars through a combination of:
Full expensing of domestic R&D costs
Retroactive refunds for 2022–2024
Annual R&D tax credits (often worth 5–10% of qualifying expenses)
Startups with less than $5 million in annual revenue can use the R&D credit to offset payroll taxes—up to $500,000 per year—resulting in quarterly cash refunds, even without taxable income.
Work with our expert team at TaxTaker. We help innovative companies like yours identify, document, and claim the maximum R&D tax credit available—while ensuring you stay fully compliant with IRS requirements. Our team specializes in both federal and state R&D tax credits, and we know how to uncover hidden value by reviewing past filings for potential refund opportunities. With the new 2025 rules in place, we’ll build a tailored strategy that maximizes your savings now and in the years ahead. That’s why businesses across the country trust TaxTaker to deliver results they can count on.
Working with TaxTaker is risk free. TaxTaker collects a success fee only if you qualify for a tax credit.
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